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Consumer Psychology

IMAG0318bLast week the Supreme Court rejected an appeal by Imperial Tobacco to overturn new legislation banning the display of tobacco products in Scotland.

I imagine that most of you will agree with me that this is great news.

Why we even entertain the tobacco companies’ opinion on the matter of banning cigarette displays is beyond me, after all, tobacco companies admitted to lying for years about the dangers of smoking. They knowingly promote an extremely addictive product that kills half of its users. As Samuel L Jackson would say:

This news follows on from Australia’s plain packaging cigarette policy, which came into force this December. Basically, all cigarettes sold in Australia now come in olive green packaging, with little to distinguish between the brands apart from the name and the variant. Encouragingly, British MP’s are calling for the introduction of similar policies in the UK.

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Naturally, the tobacco industry has come up with several arguments against plain packaging rules, and have responded to the plain packaging legislation by accusing the government of becoming a Nanny state.

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Nanny State??

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Ah, but of course…

Their main assertion is that there is no evidence that plain packaging is effective in discouraging young smokers, or encouraging existing smokers to quit.

They would say that though. After all, turkeys don’t vote for Christmas.

turkeyContrary to what the tobacco companies would have you believe, a causal effect between exposure to tobacco promotion and the initiation of tobacco use in children has been established (DiFranza et al., 2006). Morgenstern, Isensee, and Hanewinkel (2013) also found evidence that mere exposure to cigarette advert is all that is needed to enhance a young adolescent’s  attitude towards it. This ‘mere exposure’ effect is an implicit process and does not require one to consciously attend to the stimuli (Gordon & Holyoak, 1983).

Clearly, children are influenced by exposure to cigarette packaging, which irrefutably supports a global movement towards plain packaging – the less exposure they have to brand information, the better. This is important, because in the UK and the US, most adult smokers begin smoking before the age of 18.

Neuroscience research highlights the negative impact that starting smoking in adolescence can have on the development of the adult human brain. Galvan et al. (2011) compared late adolescent smokers (15-21) with non-smokers (16-21), and found that the more addicted the teenage smokers were to nicotine, the less activity they showed in their prefrontal cortex.

This area has been implicated in decision-making and cognitive control, and it continues to develop throughout late adolescence. The researchers suggest that smoking may consequently influence how this region of the brain develops, which may have long-term consequences for the individual’s decision making ability – which may make them more likely to continue smoking through adulthood.

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Ignore what the tobacco companies are saying. They know how important packaging is in marketing. A report from a former vice president of marketing for Imperial Tobacco asserted that:

“one of every two smokers is not able to distinguish in blind (masked) tests between similar cigarettes …for most smokers and the decisive group of new, younger smokers, the consumer’s choice is dictated more by psychological, image factors than by relatively minor differences in smoking characteristics.” (p. 5)

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“This doesn’t taste right…”

A myriad of factors can influence a smokers perception of a brand. For example, smokers concerned with the health risks of cigarettes are more likely to choose white packaging (Bansal-Travers et al., 2011a). The new olive green packs prevent tobacco companies from preying on this misconception.

Of course, the companies are finding ways to push their brands onto smokers despite these packaging laws. For example, in the absence of colourful packaging, they have begun using verbal imagery to distinguish their brands, with varieties such as “sea green menthol” and “smooth amber”, “crush blue”. Like colour, different words can also change people’s perceptions of the health risks of cigarettes, with words like “light”, “silver” and “smooth” perceived as delivering less tar and a lower health risk compared to other descriptions (Bansal-Travers et al., 2011b).

As McLure et al. (2004) demonstrated when they researched consumer preferences for Coca Cola and Pepsi, brand information can have a dramatic impact on behavioural preferences and on brain responses in consumers. Many smokers show strong brand preference and loyalty, and given that nicotine and sugar both activate the reward circuitry of the brain, we can presume that brand information on cigarette packaging has a similar effect on smokers’ preferences.

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Brand Loyalty

Plain packaging is a step towards both preventing future generations from developing this deadly addiction, and helping those who are trying quit the habit by removing many of the cues and associations that can drive them to continue buying tobacco products. And if anybody disagrees –

Crowdsourcing: The Other Side Of The Coin

Last week I used threadless.com as a model for how crowdsourcing can an effective way for a company to increase demand in their product. This week I was browsing through some other blogs when I came across one by venividivulgo, who took a more negative perspective on crowdsourcing, labelling it “slave labour”.

Venividivulgo suggested that making money out of the ideas of others without appropriate reimbursement is questionable ethically. I personally disagree. After all, if people don’t want their ideas to be used, they are under no obligation to participate.

However, crowdsourcing will always have the potential to turn sour. The images below are of outraged tweets by (design agency watchdog?), showing what happens in the digital age when companies run design competitions (a form of crowdsourcing), but nobody wins the advertised prize money.

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In my opinion, if a company runs a design competition but nobody wins, then that is unethical – because their work has been “crowdsourced” under false pretences. I’m sure many of you will agree.

Contrast this with how threadless do things – very transparent, and we can deduce that for crowdsourcing to be effective, companies must be transparent – to avoid scandals like this one, particularly in the age of social and digital media.

When Crowdsourcing Backfires…

 Speaking of digital media, how about these videos for examples of crowdsourcing backfiring on a company?

Chevrolet actually provided the facilities for all of these adverts to happen. They set up a website with software preloaded on a website where people could edit together a load of different footage of Chevrolet cars (including one where the car is perched on a mountain), choose their music, and program the text to overlay the images. In short, Chevrolet were the architects of their own misfortune. Evidently, crowdsourcing isn’t right for all companies, particularly ones who want to manage their image carefully.

Why Do We Bother?

The users of these videos weren’t paid for putting together these videos, and I’m pretty sure they knew their entry wasn’t going to win the competition. They did them because they were intrinsically motivated to do so. Similarly, when we were asked to host an event in PJ hall last year, my friend and I came up with lots of ideas for mid show videos, and this was the first one we filmed:

The event was later cancelled – but unlike the people who participated in the design competition, we didn’t really care – we had fun making the video over three days, and filmed it because we wanted to, not because of external reward. Furthermore, we did all this using limited resources – a £50 camera that we borrowed from a member of staff, a tripod, and a macbook pro laptop.

This is all relevant to crowdsourcing. Ambile, Hennessey & Grossman (1986) showed that intrinsic motivation enhances creativity, while extrinsic motivation has a negative effect on creative tasks, and inhibits creativity. They also suggested that creativity results from risk taking and uninhibited exploration.

Similarly, studies have shown that children who initially show high levels of interest in creative tasks show decreased interest when working for expected extrinsic rewards, compared to children who work for no reward, and that the extrinsic children’s work is assessed to be of lower quality (Greene & Lepper,  1974; Lepper, Greene and Nisbett, 1973).

Titans in the field of motivation Deci, Koestner and Ryan (1999) also assert that  “tangible rewards tend to have a substantially negative effect on intrinsic motivation”, and that tangible rewards have a negative effect on intrinsic motivation, and that attempting to control people’s behaviour also has a long term negative effect on motivation.

Implications For Businesses

These studies show that if businesses want to get the best crowd sourced ideas, they need to ensure that their users feel intrinsically motivated to contribute, and that tangible rewards are unnecessary. In fact, they are best avoided altogether. In order to maximise creativity, they also need to provide users intuitive and engaging platforms that allow them to explore the creative options available to them freely and fully.

The Chevrolet website is a perfect example – they provide a fun medium, and some really cool facilities to the public – some incredible panoramic shots, dramatic music, and free reign on the text. As a result, users came up with some really creative adverts! The only problem of course, was that the results cast Chevrolet in a negative light. Nonetheless, the results of their videos do highlight the massive potential of crowdsourcing creativity to provide free publicity and generate engaging content.

We all have our favourite clothes brands. Caroline loves Jimmy Choos. Gudgeon favours retro jumpers bought from tramps. Me? I’m partial to threadless t-shirts. Here’s me on holiday wearing one of my favourite threadless t-shirt designs. It’s called “to scan a forest”. I think the design is an amazing piece of art.

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to scan a forestOf course you may not like this design – but if you visit www.threadless.com, you’ll be able to look through literally hundreds of t-shirts that were all initially submitted to the site as designs (over a 1000 submitted each week), been voted on extensively (each design receives an average of 1,500 votes by the threadless online community), the most popular of which are then printed and sold as t-shirts (around 10 are chosen each week). There’s bound to be a few designs that catch your eye.

The process by which t-shirts are designed and chosen on threadless is best described as “crowdsourcing” (Howe, 2006), which is similar to outsourcing, except that the work is outsourced to an ‘undefined’ public rather than another business or organisation.

In this case, the ‘undefined public’ are the community of designers and design lovers that design, vote, and buy the designs, of which there are 1.8 million members.

Threadless’ business model could not exist without the Internet, which is the means by which the community communicates. In fact, the business actually started in the early days of the Internet, on an online forum of graphic designers, and the subsequent growth of the Internet has obviously contributed to the success of the business.

Fuchs, Prandelli & Schreier (2010) outlined the psychological consequences of this business model in a study that actually used t-shirts as the products to be evaluated.

They found that empowering customers to play a part in selecting t-shirts to be produced and sold results in stronger demand for the products, even when subjective and objective evaluations of the quality of the product are the same. They also find evidence that empowerment affects feelings of psychological ownership over the products they helped select, which may play a part in this increased demand.

The authors highlight that this irrational effect contradicts economic theory, which suggests if two products are of the same quality and value, demand for the product should not be increased. As psychologists however, we know that human beings don’t act in rational ways. The authors refer to this increased demand following empowerment in selecting the product as the “empowerment – product demand” effect.

Threadless have even found a way of bringing people who don’t initially vote on the designs into the production process. Every shirt is produced in limited quantities, and when they run out of stock, they only reprint when a certain amount of customers requests a reprint. In this way, even members of the community who weren’t involved in the initial design, critique, or voting process can are empowered. I can say from personal experience that it’s very satisfying when you get an email saying that a t-shirt you requested for a reprint has been reprinted!

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Interestingly, the researchers also found that the “empowerment-product demand effect” diminishes if the consumers do not feel they have the competence to make good decisions in the product selection task. This highlights the need for companies to facilitate helpful online communities and giving users information to increase their expertise and knowledge, in order to maximise this ‘empowerment – product demand’ effect. Using threadless as as example, the “empowerment-product demand effect” might not be evoked in the type of person who needs to be told by someone else what looks good.

To summarise, crowdsourcing is a powerful tool, and empowering consumers by making them part of the selection process increases demand for the product, which means that the company can sell more products, and charge higher prices. This goes some way to explaining why threadless are so successful, and are able to compete with much larger clothing labels and retailers – the community plays a crucial role in creating and choosing which products get printed. Clearly crowdsourcing is an effective way for smaller businesses to compete with larger corporations, particularly in the digital age, and should be considered by any business hoping to increase demand for its products.

Last week I blogged about Nespresso and their luxury machine + capsule + service experience. While I was researching the topic, I stumbled upon numerous articles complaining about the high cost of the coffee capsules. These capsules can be bought for around 30p each – which makes the average cup of home coffee around three times more expensive than buying filter coffee – but still far cheaper than the average high street coffee shop. It got me thinking about how we perceive value, both in terms of time and in terms of pricing.

30p per capsule – is that really too expensive?

Time > Money

One of the selling points behind Nespresso is the convenience and the time saved during the process. No cleaning out a filter, no boiling a kettle, even the mail order service reduces the amount of time spent at the supermarket.

Aaker, Rudd and Moligner (2011) examined the connection between time and happiness, and found five time-spending principles that increased happiness, including

1) spend time with the right people

2) spend time on the right activities

3) enjoy the experience without spending the time

4) expand your time

5) be aware that happiness changes over time

Of these five principles, 3 and 4 directly relate to the Nespresso experience, in that the machine saves time, giving you more, and gives you an excellent coffee experience without spending the time. Indeed many people genuinely report being very happy with their Nespresso machines, this indicates why.

Of course, that’s not to say that spending time (and money) at the coffee shop isn’t well spent. A coffee with friends is spending time with the right people, which this study, and a study by Dunn, Gilbert and Wilson (2011) would argue is time and money well spent.

The Effect of Pricing Points

The pricing of the machines themselves are also interesting. The three machines priced from £70 to £125.99 all do pretty much the same thing. For £159.95, you get the bonus feature of heated milk.  Why have Nespresso bothered releasing three different machines which all pretty much do the same thing?

The bottom end of the Nespresso range. But why does the £70 one look so tempting?

Shafir, Simonson and Tversky (1993) presented the case that when we seek choices under conflict we seek different options. If Nespresso only had one standard coffee machine before the heated milk upgrade, the consumer might seek choices else where from other coffee machine makers. By producing the alternative choices themselves, Nespresso is accounting for this psychological ‘option seeking behaviour (scroll to chapter 3 – ‘Choice under conflict: seeking options’ for an explanation of this behaviour).

This paper also showed that by adding more options (three is ideal) can make the cheapest product seem like a better choice. Dan Ariely suggests that this is because as humans we judge value relatively, so in the context of these Nespresso machines, having two machines costing £109.99 and £125.99 makes the £70.00 look like good value. Or, on the other hand, a buyer who worries that the £70 option might be cheap might think that a more expensive machine indicates good value, and given the small jump from £109.99 to £125.99, might be more likely to make the jump.

In conclusion, the coffee and the machines that Nespresso sells are undoubtedly quite expensive compared to other home drinking coffee options. However, Nespresso utilise psychological principles to maximise customer satisfaction and create favourable price perceptions, giving their customers the perception of value, whilst simultaneously and maximising sales and profits.

George Clooney. Who else?

Nespresso sell a range of specialist coffee machines that use capsules sold exclusively by the company via their mail order service or via the Nespresso boutiques located in London, Manchester and Birmingham. To be able to order the capsules online you need to sign up to become a member of the Nespresso Club, which is “dedicated to providing the ultimate coffee experience”.

Nespresso capsule range, which work out around 30p per capsule. Still cheaper than Costa!

Rather than targeting the crowded coffee shop market, Nespresso have positioned themselves as a luxury coffee company in home and office settings. Along with your first order they send you a little booklet that really flowers up the whole coffee experience, describing each aspect of the coffee making experience in amazing detail. They have profiles of all the ‘Nespresso Experts’, the individuals involved at all the different stages of the coffee making process, and everything in the booklet seems designed to mythologise and ritualise the coffee drinking process, arousing all the sensory characteristics of coffee.

They explain how to distinguish between the different aromas, notes, body and flavours, how the different roasts affect the intensity, and really encourage the user to take their appreciation of coffee to the next level (their regular magazine also features countless articles promoting the ‘art of coffee’).

A sample of the range of coffees available for your Nespresso machine. The descriptions apply just as easily to farts.

Let’s face it; on one level this is all very pretentious stuff. Charlie Brooker has derided the magazine Nespresso send out as “an aspirational lifestyle marketing exercise by desperate lunatics”, and indeed, many aspects of Nespresso’s marketing mythologise and ritualise the coffee drinking process to absurdity. Then again, wine and whiskey experts are equally pretentious, so why shouldn’t Nescafe jump on the bandwagon?

Criticisms aside, there’s actually a really powerful psychological aspect of turning consumers into knowledgeable experts. Nam, Wang and Lee (2012) investigated the different criteria on which expert and novice consumers make their choices when buying electronic goods, and I believe these differences can be generalised to other goods as well.

Novice consumers base their choices on differences in basic features that are easy to compare. So, in the case of coffee, a novice might make a choice between a cappuccino or an Americano, which taste very different, and differ strongly in bitterness. In contrast, experts base their choices on more specific, unique attributes of a product. Crucially however, the consumer need to first be made aware of and understand these unique attributes, and this can then change their buying behaviour.

For example, the authors of this study found that the novices reliance on easy to compare features, (known as alignable features) could be attenuated when they were motivated or provided with greater category knowledge. Essentially, increasing novice consumers’ knowledge led to consumers using unique, non-alignable attributes as their basis of judgements.

Nespresso exemplify this perfectly. By making their customers more aware of the subtleties and differences between different types of espresso, they are providing their customers with knowledge and motivation to become coffee experts, and in doing so, are potentially changing the way that their customers judge coffee, in alignment with Nespresso’s model of having a wide range of espresso coffees that differ in a number of subtle ways.

Clearly, the idea of informing and educating the consumer, turning them into experts is a powerful one, which has many implications for the way that companies design and market products.

Musicians and alcohol go hand in hand. A song by a musician can immortalise a drink and place it in the minds of their listeners forever. Here are some lyrics that will live inside my head forever:

“I’ll fake it through the day with some help from Johnnie Walker red…” (Elliott Smith)

“Rolling up a fatty, but the Tanqueray straight had me…” (Luniz)

and my personal favourite:

“Now you and me can drink some Hennessy/then we get it on

Mad women wantin to bone Sean Combs/sippin on Patron” (P. Diddy)

In an analysis of popular US music songs between 2005 and 2007, 20% of songs made explicit references to alcohol, and 25% of these songs mentioned a specific brand. The top three brands were Patron tequila, Grey Goose vodka, and Hennessy cognac, accounting for 65% of references overall. (Primack, Nuzzo, Rice & Sergent, 2011)

Songs featuring brands made strong aspirational connections between alcohol and themes such as wealth, sex, luxury objects, partying, drugs, and vehicles.

Effectively, these songs are mini adverts, giving the listener positive feelings, associations, while promoting specific brands of alcohol. As previous blogs have mentioned, for sexual imagery and celebrity tie-ins to be effective, the product have to be congruent with the message, and what could be more congruent than the partying musician enjoying his favourite luxury brand of alcohol?

One example of the effectiveness of brand promotion in songs is the 18.9% increase in sales seen by Courvoisier following Busta Rhymes release of “Pass the Courvoisier”, the song at the top of this blog.

This got me thinking that a great way for companies to build their brands and increase sales would be increased integration with musicians. Perhaps promoting specific brands within the music community would help capitalise on the positive associations that being referenced in mainstream songs can bring.

ImageOne example would be The JD Set  – the series of gigs Jack Daniel’s ran between 2002 and 2011 to promote and bring a serious of one-off, unique collaborations between artists. Tickets were always hard to come by, and you either needed to know the right people, or win a competition to get in, but it was always a great show.

Another incredibly effective example of a brand/musician collaboration is the partnership of entertainment kingpin/sometimes rapper P. Diddy and beverage titans Diageo, who in 2007 became 50/50 partners in the Ciroc brand of premium vodka.

ImagePrior to Diddy’s involvement, the brand’s USP was that it was one of the only vodkas on the market made from grapes. The problem with promoting the brand according to Jon Dobbin, a senior member of the brand’s agency was that: “That whole grape story just didn’t work, because nobody really cared.”

The results speak for themselves. Since the “Diddy merger” in 2007, up to 2010 the brand has grown 552%, and Ciroc has become the number 2 ultra premium vodka in the world. There’s no doubt that P. Diddy’s celebrity and promotional credentials have helped convert younger, affluent consumers with his celebrity contacts and aspirational messages, exemplified in adverts like this:

The brand has also branched out into flavoured vodkas, and if you made it this far, here’s a fun little Ciroc advert featuring Aziz Ansari and Diddy promoting the range (albeit still peppered with aspirational messages and positive associations throughout):

We all know what we should say when someone asks us what we mean by sustainability. Peace and harmony. Understanding. Symbiosis. Respect. Wind farms. Trees! But as psychologists we know that just because we say something it doesn’t mean that’s how we actually behave.

The truth is, I don’t particularly care or feel bad about not behaving in a sustainable way. Don’t get me wrong; the day that I can afford an electric car (how cool will that be), I will be on it like a shot. But right now, I don’t feel like I need to change my behaviour, because frankly, I don’t feel like I’m the problem.

Where Sustainability Marketing is at

Unilever urging consumers to buy (their) sustainable products.

In this article, the CEO of Sainbury’s is reported as saying that it is a “challenge” to “inspire” customers to adopt sustainable values, and that Sainsbuys have been consulting other supermarkets for advice. The head of unilever has described similar difficulties.

 “The trouble is that the environment is somebody else’s problem and people feel powerless. That’s why with our corporate brand we’ve been focussing on small actions and big difference. We need to use our broad consumer base to say ‘you individually are making small actions but you multiplied by 100 million – that’s a big difference’. That’s the way we’re going to try to engage people in this.”

It’s a perfect case in point of how I think retailers underestimate the intelligence of shoppers, and demonstrate a pitiful understanding of what it means to inspire someone.

If you want to inspire someone to do something, you need to lead by example. The most inspiring manager I ever worked under (ironically, at a supermarket) once told me “You should never ask anyone to do something you wouldn’t be willing to do yourself”. That’s why these sustainability campaigns aren’t working. Supermarkets are trying to figure out how to get consumers to make sacrifices and change their behaviour, without making the same sacrifices themselves.

Redirected Efforts

Instead of trying to sell consumers sustainability, supermarkets should invest A LOT more effort into behaving in ways that reduce their carbon footprint. One retailer that seems to be making an effort is Sainsburys. They have committed to a 2020 sustainability plan that outlines 20 clear goals to move towards long-term sustainability.

They’ve already begun putting their money where their mouth is, having installed around 70,000 solar panels on 169 stores nationwide, making it the biggest solar power generator in Europe.

Sceptics have suggested that they aren’t going far enough. But at least they’re setting goals within a realistic deadline. TESCO in contrast have outlined plans to be zero carbon by 2050 – ambitious, and it’s going to be a long wait to see if they make good on these promises. It also seems like an unrealistic goal. Are they really going to be able to turn 6,351 stores worldwide into zero carbon stores?

Sadly, most companies have no such plans. In fact, this article highlights that that almost half of the UK’s biggest companies do not have targets to reduce greenhouse gas emissions. What example are these companies setting for the public?

 How to inspire real change

People aren’t going to change their behaviour on the back of a clever marketing campaign that makes them feel like they belong to some kind of movement. Remember Kony 2012? However, the more that companies begin behaving regularly in sustainable and eco-friendly ways, the more that will become the norm, and the more likely people will be to follow suit.

Currently, this isn’t the norm. The norm is maximising profits, increasing market share then buying more land, building, and expanding.  This whole process makes a greater carbon footprint than I will make in my entire life. The way they try and dress this process up to be compatible with sustainability is laughable. TESCO for example, state that their aim is that by 2020, the average carbon footprint of their new stores will be 50 per cent smaller than in 2006. How noble – only exploiting the world’s resources half as much? Real philanthropy right here people.

This is the fundamental contradiction of retailers advocating sustainability  – expanding their businesses increases their carbon footprint. Is that enough of a reason for them to stop expanding? Of course not.

And yet, we’re the ones who needs to change our behaviour??

It’s going to take a lot of PR to spin our way out of this one.